Robert J. Samuelson: The long road to ‘full employment’

It’s a stretch to see digital technologies as a major source of today’s unemployment. In the recession, the economy lost 8.7 million jobs. Most were nondigital, concentrated in construction, finance, retailing and manufacturing. What seems less dubious is that, in a permanently sluggish economy, firms might favor digital investments that shave costs and sustain profits. McAfee envisions warehouses maintained by robots, trucks driven by computers and automated language translations. The digital revolution could stymie job growth.

Unfortunately, the Great Recession abetted this protected psychology. This keeps unemployment up. Companies didn’t just fire workers; they also went on a hiring strike. “In the Great Recession, (hiring) took a bigger hit than in any previous recession — and has not recovered,” economist John Haltiwanger of the University of Maryland recently told a conference of the National Bureau of Economic Research. In other post-1980 recessions, he said, less hiring accounted for about 20 percent of the job loss; in the Great Recession, the share was roughly 60 percent.

Haltiwanger sees the economy becoming less dynamic. Young firms less than five years old create a huge number of new jobs, but the rate of startups has declined — and, with it, new jobs. In the late 1980s, startups’ share was nearly half; now, it’s just below 40 percent. The causes of the startup slump are unclear. Some candidates: an aging society, government regulations, more risk-aversion.

The recent pickup in hiring to 200,000 a month, about 10 percent higher than 2012’s rate, is encouraging. But it’s still a long way to “full employment.” Projections have us getting there in 2017 or 2018, assuming faster growth and no recession. Let’s hope that’s not wishful thinking.